FNV – Franco Nevada Leading Precious Metal Stock

by Olivier on January 3, 2013

Quick follow up post on precious metal mining stocks and what to expect down the road. As you can see in my KGC – Kinross Gold chart analysis a few weeks back, I drew your attention to potential stop buy levels that would indicate sound technical entries. Price hasn’t even tried to touch these levels so far. This goes to show how using stop buy orders can protect you from your opinion. It’s OK to be bullish based on whatever reason you might come up with. It’s not OK to commit money if price doesn’t confirm your opinion. That being said I have been avoiding exposure to mining stocks since March 2011. I believe it will soon be time to get aggressive again, but my opinions do not matter. Until price tells me to go for it I do stand aside.

On to FNV – Franco Nevada a royalty company which is part of my public list. FNV is one of the best looking stocks within the precious metals sector. It has a very smooth trading personality and it is trading close to its all time high. A stock trading near its all time high is a sign of strength. Basically one doesn’t need to know more.

FNV hasn’t broken out of its bullish flag yet. Until it does I am avoiding mining stocks and am standing aside. As the market adage goes:

“Leaders need to lead.”

When FNV breaks to the upside it will be the signal to commit funds to that sector. The most beaten down stocks will initially lag but some will ultimately outperform because they will try to catch up. Again, only some will catch up. Most probably won’t. If in doubt, the safest and easiest bet is to go with the leaders that offer price appreciation potential without overhead resistance.

A trader should have no opinion, the stronger your opinion, the harder it is to get out of a losing position. – Paul Rotter